January 8, 2024
More than ever, Americans are investing in stocks. Findings released in fall of 2023 from the Federal Reserve’s consumer finance survey showed that 58% of households in the US are stockholders, either owning directly or through managed funds for retirement or other managed accounts. This triennial report, having been in place since 1989, is a comprehensive survey that collects data on families’ balance sheets, pensions, income and demographic characteristics. Numerous agencies like departments of the Treasury, Justice and Commerce, and the Federal Deposit Insurance Corporation rely on data from this survey. The most recent survey has provided insight about investors during the COVID years that is interesting and useful.
Many American households have been investing in 401(k) accounts for years, and participating in these type of funds is considered a financial baseline. In the last few years, an increasing number of individual investors have purchased stocks. From 2019 to 2022, direct stock ownership increased by 6%, the largest recorded growth since 1989. Even though retail shareholders generally have less disposable income to invest compared to individual investors of the past, they are putting a larger percentage of their savings into the stock market.
The Federal Reserve consumer finance survey data shows that the COVID-era investment boom changed Americans’ personal finances. During quarantine, many people found themselves looking for ways to create security, whether through building savings or developing a new source of income through stock investments. During that period, millions of interested new retail shareholders took the plunge by investing in the stock market for the first time. New investors were encouraged by the affordability of the landscape following the elimination of commission fees on stocks trading throughout US brokerage companies, and had more available time to learn.
Both younger and older investors invested in the market after studing stocks and creating accounts in easy-to-use brokerage apps, which also helped make investing easy. In a survey by Charles Schwab, 55% of respondents said that they began investing during the pandemic to build an emergency fund and 53% of those that took the survey said they looked to their investments as an additional source of income. The trend continues to grow, with more people seeking financial stability and market success. Of those surveyed who identify themselves as investors, 15% say that they began investing in the last year. Schwab created a name for this group, calling them Generation Investors (GI). Schwab said the group has a average age of 35, a significantly younger cohort than the pre-COVID average investor age, which was 48. About 50% of the GI are millennials.
As investors grow in numbers, they become more discerning and selective and more likely to seek out funds with investment benefits beyond those tied to stock market growth. Some companies that see their individual shareholders as real owners, have added benefits and have created perks programs. Companies like Carnival (Tii:CCL) are currently offering shareholders $100 credit for seven to 13 days at sea available to individual investors that hold 100 or more shares. Or investors that hold a single share in eBay (Tii:EBAY), can have a 20% discount off Cozy Fashion. Other companies that offer both products and services, like Whirlpool (Tii:WHR), Mondee (Tii:MOND), and Expedia also offer attractive bonuses to investors. Take a tour of TiiCKER and connect your brokerage account to see what shareholder perks you might quality for.
Gains from investments and shareholder perks programs continue to encourage investment popularity and grow wealth. Between the years of 2019-2002, the US household median net worth climbed 37%. This number, adjusted for inflation, is the biggest increase since 1989 -– the first year of Federal Reserve’s consumer survey.
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